In Mexico, a real estate trust, commonly known as a "Fideicomiso," is a legal arrangement allowing foreign nationals to own property in the country's restricted zones. According to the Mexican Constitution, foreigners cannot directly own land within 100 kilometers (about 62 miles) of the borders and 50 kilometers (about 31 miles) of the coastline. The Fideicomiso acts as a workaround; a Mexican bank holds the property title while the foreign national enjoys all ownership rights, including selling or leasing the property.
When a foreign national who owns coastal property in Mexico through a Fideicomiso passes away, several steps must be followed to transfer the rights to a successor beneficiary. Following is a non-exhaustive list of steps that are usually followed to accomplish this:
Step 1: Review the Trust Agreement
Check the trust agreement to understand the conditions for transferring the property to a successor beneficiary and to determine who is listed as the successor beneficiary (fideicomisario substituto).
Step 2: Consult Experts
Seek advice from qualified attorneys who understand both Mexican trusts, probate laws, tax laws, and property laws.
Step 3: Obtain Death Certificate
Get a certified copy of the death certificate of the deceased beneficiary (the “owner”). If issues outside of Mexico, it must be either apostilled or legalized, depending on the country of issuance. If issued in the US then an apostille is required from the State government that issued the deceased beneficiary’s death certificate. If issued in Canada then the death certificate must be legalized by a Mexican Consulate. If the death certificate is not in Spanish then it will need to be translated by a Mexico-based certified translator.
Step 4: Notify the Trustee
Inform the Mexican bank, acting as the trustee, about the beneficiary's death. This notice takes the form of a Letter of Instructions. The death certificate, with apostille and certified translation (if applicable), will need to be attached to the Letter of Instructions as an exhibit. The Letter of Instructions must inform the bank the name and number of the notary public in Mexico that will amend the trust and before whom the Mexican bank’s representatives must appear to sign the trust amendment that recognizes the successor beneficiary as the Trust’s beneficiary (the owner).
Step 5: Submit Required Documents
Provide any additional documents requested by the trustee, which may include the IDs, proofs of address, and Anti-Money Laundering compliance (Know Your Client) forms.
Step 6: Pay Fees to Trustee
Expect to pay the Mexican bank all unpaid annual fees and an additional fee for the trust amendment.
Step 7: Make the Real Property Current with Property Taxes and Other Obligations
If the real property owned through the Fideicomiso has liens or is not current with its property taxes, utilities, HOA dues, and other obligations then these will need to be paid. Certificates of No-Liens and Certificates of No Taxes will be required by the Notary Public as a requirement to amend the trust.
Step 8: Hire and Pay the Mexican Notary Public
A Mexican notary public is required to amend the Mexican real estate trust. The notary public designated in the Letter of Instructions sent to the trustee must be hired to prepare a notarial public deed that amends the trust by recognizing the successor beneficiary as the new beneficiary and designates a new successor beneficiary. A notary will charge fees for this service. Also, non-residents of Mexico may be required to pay taxes. The Mexican notary public will act as a withholding agent on behalf of Mexico’s government for such taxes.
Step 9: Execute the Amendment to the Trust
The successor beneficiary and the trustee bank’s representative must appear at the notary public’s office to sign the notary public’s protocol books where the original public deed for the amendment of the trust will remain. A certified transcript of this notarial public deed is what is then signed and issued by the notary public to the new beneficiary.
Step 10: Record the Trust Amendment
Once the rights are transferred successfully in the amended trust, the resulting certified transcript of the notarial public deed must be recorded at the Public Registry of Property that is local to the real estate owned through the Fideicomiso. The new beneficiary then gets a certified copy of the notarial public deed for the trust amendment with the recording information.
